Since the launch of the Bitcoin blockchain in 2009, a growing number of engineers and developers have taken the core principles of blockchain technology, and gradually expanded on its utility and capabilities — building ever-more capable blockchain platforms and decentralized services.
Despite still being arguably in its infancy, the blockchain landscape is now as wide as it is deep, and is rapidly growing in complexity as businesses and users demand more from existing platforms, and develop solutions for some of blockchain technology’s early limitations.
In this lesson, we’ll take a deeper look into the growing blockchain landscape, giving you an overview of today’s stand-out blockchain platforms and the challenges currently facing the industry.
The Major Blockchain Platforms
Just over a decade since the launch of the first blockchain, there are now well over 100 independent blockchains. The vast majority of these are relatively obscure and remain poorly developed and unused, while around a dozen have gone on to achieve incredible success and widespread adoption.
Some of today’s most popular blockchain platforms include:
Bitcoin: The original blockchain. Bitcoin introduced the world’s first cryptographically secure decentralized digital currency and brought with it rudimentary scripting capabilities that formed the foundation of modern smart contracts. Though the platform is relatively slow and scales poorly, it is arguably the most secure blockchain and has by far the most users. It also recently got an update (see taproot upgrade) that improved its scalability, efficiency, and smart contract capabilities.
Ethereum: Launched in 2015, Ethereum became the world’s first smart contract-capable blockchain, allowing developers to launch incredibly powerful and useful decentralized applications (DApps). The platform is currently by far the largest smart contract platform by market capitalization and now has more than 3,000 DApps up and running.
BNB Chain (Formerly Binance Smart Chain): Designed to provide an Ethereum-like user and developer experience, albeit, with much lower fees and higher throughput, BNB Chain saw its popularity grow rapidly between 2019 and 2022. It is now used for a wide range of applications, including decentralized games, exchanges, synthetic assets, and marketplaces.
Solana: Arguably the first truly scalable, energy-efficient blockchain, Solana is a smart contract platform designed to host applications that can support potentially millions of simultaneous users — while still remaining fast and economical. The platform currently boasts over 1 million active users and has a rapidly growing DApp ecosystem.
Terra: Built for decentralized financial applications, Terra is a Proof-of-Stake blockchain centered around the LUNA digital currency and an algorithmic stablecoin known as TerraUSD (UST). Focused on financial utility, price stability, and the adoption of digital currencies, Terra is designed provide a decentralized alternative to banks and traditional money markets.
Polkadot: Billed as a layer-0 blockchain, Polkadot is a platform that connects other previously independent blockchains together through a system that includes a central Relay chain, in addition to any number of parachains and parathreads (each of which is a sovereign blockchain). The platform launched in May 2020 and the first parachains are set to be deployed in 2022.
Each of the aforementioned blockchains is an example of a so-called “permissionless” system, which essentially means anybody can use the platform and/or develop products, services, and applications for it. On the other side of the spectrum are the “permissioned” blockchains, which restrict who can access and maintain the blockchain, and are usually reserved for enterprise use cases.
Two of the most popular permissioned platforms include:
Quorum: A fork of the Ethereum blockchain, Quorum is a private platform that includes several protocol-level updates that make it better suited for business use cases while improving performance and privacy. It features enterprise-grade permission management and hot-swappable consensus systems that allow it to be customized to any business application.
Hyperledger Fabric: This is a modular blockchain framework that allows enterprises to easily build their own application-specific blockchains by using plug-and-play components. Like most permissioned systems, it features powerful identity management and access controls and supports various degrees of confidentiality.
Powering Decentralized Applications
The rapidly improving variety and capabilities of blockchain platforms is, over time, leading to increasingly powerful DApps that improve the utility of blockchain-based assets and unlock functionality that cannot be easily replicated by centralized alternatives.
Take Yearn Finance as an example. The platform provides an automated yield generation solution for contributors by pooling user funds into one or more ‘vaults’, which use a variety of strategies to generate returns for participants — such as the 'Curve Yield Seeker' and 'Compound Finance Flashmint Folding' strategies. By using smart contracts to automatically execute the best strategies based on changing market conditions and opportunities, the platform maximizes yields for users while keeping fees low.
Mirror Protocol also represents an interesting demonstration of smart contract technology. The platform allows users to trade and borrow tokenized derivatives that track the price of practically anything — such as stocks and other cryptocurrencies. It uses oracles to track the price of the real-world counterpart asset but uses the ultra-efficient Terra blockchain to enable users to trade derivatives in seconds, at low cost, and with zero barriers to entry. Prior to the advent of smart contracts, users generally needed to pay expensive brokers to gain exposure to stocks.
Why Are There So Many Different Blockchains?
Navigating your way through the blockchain landscape can be somewhat challenging initially, given that there are now dozens of platforms offering the same, or at least very similar features.
But while it can be argued that there isn’t a need for most blockchain platforms, several have managed to distinguish themselves from the competition by either being simply more accessible or by offering unique features and applications.
In most cases, new (or newer) generation blockchains are designed to either address the limitations of older platforms, or provide utility that other blockchains cannot replicate. That said, the vast majority of blockchains tend to compete on one or more of five following points:
Scalability: Early blockchains like Bitcoin and Ethereum proved to be incredibly popular, and ended up seeing significant adoption. However, they also proved to be relatively unscalable, with the Bitcoin and Ethereum blockchains only capable of supporting ~7 and ~14 transactions per second (tps) respectively. Newer blockchains tend to offer far better scalability, many of which now support upwards of 1,000 tps.
Privacy: Given that most blockchains have a public ledger that can be viewed at any time by essentially anyone, some argue that this poses a privacy risk — doubly so due to blockchain analysis firms like Elliptic and Chainalaysis which work to deanonymize users. Many newer blockchains offer improved privacy for users and some are beginning to offer so-called “private smart contracts” using technologies like zk-snarks.
Efficiency: The first blockchains all used a highly secure albeit highly energy-intensive decentralized consensus solution known as Proof-of-Work — which essentially sees high-end computers compete to ‘discover’ blocks, process transactions, and earn a reward. Most newer blockchains use a more energy-efficient consensus system, known as Proof-of-Stake (or a related variant), which eliminates the process of mining but instead requires node holders to stake their tokens, validate blocks, and earn rewards if they are acting honestly (or be penalized if they are not).
Interoperability: Most blockchains have little to no ability to interoperate with other independent chains, which means applications existing on one platform cannot communicate with those operating on others — limiting their utility. Several newer blockchains, including Polkadot and Cosmos, aim to address this limitation, by building cross-chain communication technologies.
While new blockchains frequently crop up and offer to resolve these issues, pre-existing blockchains are generally upgraded over time to improve their capabilities. Perhaps the best-known example of this is the upcoming Ethereum POS upgrade, which will dramatically increase its potential scalability, energy efficiency, and environmental friendliness.
Lesson Recap (TL;DR)
There are now well over 100 independent blockchains, several of which have achieved widespread success due to the unique properties and features they offer.
Blockchains can generally be divided into one of two categories: permissionless (most public and community-operated blockchains) and private (enterprise-grade blockchains for businesses).
Most new platforms aim to build on the features of previous generation blockchains, and typically boast one or more of the following upgrades: improved scalability, privacy, efficiency, developer friendliness, and/or interoperability.
Recent advances in blockchain technology now enable incredibly accessible and useful decentralized applications (DApps), including Yearn Finance and Mirror Protocol.